Bonds are debt instruments in which an investor lends money to either corporate or government which borrows the funds for a set period of time at a fixed or variable rate of interest. These are a type of fixed-income investments that focus on safety and liquidity. As money experts suggest that it's not wise to put all eggs in one basket, i.e. equity, these bonds also help in diversifying an investor's portfolio.
There are mainly two types of bonds- Government bonds and Corporate bonds
Government bonds provide investors with a comparatively secure and reliable investment alternative. Because they are guaranteed by the Indian government, these bonds are among the safest investments in India.
Corporate bonds are debt instruments that businesses issue to raise money. Investors can expect a set and predictable interest income from corporate bonds. The interest rate, also called the coupon rate, is set at the time of issuance and stays the same for the bond's duration. The yields on corporate bonds can range from 8% to 12% or more depending on the issuer, the bond's credit rating, the duration, and market circumstances, among other variables.